Why start-ups need backing to break into the medtech sector

Dr. Kurt Höller, director of business creation at EIT Health, discusses the potential medtech has to improve health challenges and provides insight from start-ups on EIT’s innovation pathway.

We all want the same thing when it comes to health innovation – we want the greatest ideas that have the potential to improve lives to reach the people who can benefit, as quickly as possible. Culturally, we are a population who expect things to happen fast, especially in an age where technology affords us the opportunity to have instant, real-time access to everything from analysis of our sleep quality to diagnosing conditions using our smartphones. 

While the technology available for health applications is an ever-growing and dynamic sector, the road towards the end user is often long and complex. And rightly so in most cases. We must ensure that technology delivered to patients and citizens for health conditions is effective, safe, user friendly, cost-effective and well-integrated into current health systems.

However, this is no small task. Particularly for start-ups or individual entrepreneurs who have ideas with great potential but who do not have the capital, experience or resources to bring their solution to the regulators and reimbursement bodies. Those developing medical technologies must ensure they have compelling clinical and health economic data, patient and clinician backing, a clear regulatory strategy, and a reimbursement model that will mean patients can actually the technology once the relevant stages of the process have been navigated.

At this point, we should ask ourselves – do start-ups have an inbuilt competitive disadvantage?

Start-ups are, arguably, one of the most disruptive forces in technology today. We are seeing more and more bright entrepreneurs develop lean, agile and innovative solutions – and they are no longer afraid to turn their talents to the health sector. But unlike the pharma and medtech giants, start-ups have not trodden this path before, and this provides a distinct disadvantage. Talented teams with promising ideas that could potentially have a great impact on some of our most challenging health issues such as chronic disease, prevention of disease, and ageing, exist but don’t know what is ahead of them.

The road to market is tough for such talent – comprehensive research and development, user testing and validation, resources to collate and submit for regulatory approvals, and reimbursement strategies are all required to launch a medical technology device or service in Europe. And this often differs depending on where you are planning to launch. It’s no surprise that such groundwork also comes at great cost, which is another disadvantage for start-ups who are often navigating such groundwork for the first time.

Small start-ups and entrepreneurs rarely have the capital to bring their solution to market and must seek funding through private or public investors. One of the challenges, particularly in the earlier stages, is who will invest in a technology that hasn’t yet proven its worth with the regulators, or with clinical trials. There are of course investors who can see potential when it’s right in front of them, but you can see the predicament. 

Unfortunately for start-ups, it is often very difficult to predict what you don’t know already, and two of the start-ups we support at EIT Health can testify to that:

Martin Steinberg on his journey to market for a blood test that detects prostate cancer:  

Stockholm3 is a blood test that identifies two times more men with aggressive prostate cancer,  while also reducing the risk of conducting unnecessary prostate biopsies by 50% compared with current clinical practice with PSA. Prostate cancer is the most common form of male cancer in Europe, and latest estimates state that over 90,000 European men die from the disease each year.

Stockholm3 is in clinical use in Sweden, Norway, Denmark and Finland, and is currently being rolled-out broadly across Europe.

Steinberg said: “We had little or no idea about the steps in the innovation pathway when we began developing Stockholm3, and in a way I’m glad this was the case. Had we known about the journey ahead, we may not have started, and so sometimes a small amount of naivety can be a positive thing.

“There are many challenges along the pathway, but one of the most detrimental is whether there is a market for your product, and who will pay. With medical innovation, you are often not selling to an individual, you are selling to a hospital or a reimbursement body, and this presents a specific set of challenges. We were fortunate with Stockholm3 in that we were able to work with a local healthcare provider, as well as with a large industry player, Thermo Fisher. This was very beneficial as these collaborations significantly accelerated time to market. We have learnt a great deal about the process from our experiences with Stockholm3, and now we are developing our second product with the added benefit of knowing much better what is ahead of us and therefore being able to accelerate our development.”

Bieke Van Gorp on her experience of bringing the first ever certified app to detect atrial fibrillation:

FibriCheck was born in 2014 with a team of only four people and developed technology to determine whether an individual has atrial fibrillation – the most common cardiac arrythmia affecting more than 33.5 million adults each year globally, and a major cause of stroke³ – just using smartphones or smartwatches. Being a spin-out of a hospital, the clinical need was clear from the very beginning and the good connections with the cardiology departments provided the benefit of having relatively good access to clinical data.

Van Gorp said: “Although we had a relatively good theorical understanding of the innovation pathway, we quickly understood that the reality was a completely different story – for FibriCheck both the regulatory pathway and the introduction of alternative business models turned out to be complex and challenging.

“Regulations for example were not (yet) adapted for medical software-only applications, and as such regulatory standards needed to be somewhat interpreted to facilitate implementation.  Furthermore, the development of medical software (in contrast to developing traditional software) was an aspect we largely underestimated. That said, certification as a medical device is a prerequisite for a commercial launch, so there is no option to ‘side-step’ this part of the pathway. Certification was a game-changer in raising capital as investors were understandably more sceptical about the return on their investment until this first ‘make or break’ hurdle had been overcome.

“Besides regulatory approvals, also implementing viable business models turned out to be an uphill fight. Of course, reimbursement is the end-goal of most digital health companies, but in reality, you cannot build your story exclusively on reimbursement. In our case, everyone speaks about prevention and realises it will be necessary to keep healthcare costs affordable for everyone, but only a few are prepared to pay today. Today, we are commercially available across Europe with differing business models. By ‘thinking outside the box’, we have built up a total user base of approximately 130,000. As a start-up venturing into health, it was, and is still, not always easy. Having access to expertise that can provide insight and guidance on the pathway is really valuable for start-ups in this space.”  

EIT Health and its mission to improve lives in Europe with innovation  

Here at EIT Health, we work to support promising start-ups throughout their journey, so that the best ideas have a better chance of reaching the market as quickly as possible. Additionally, we started a piece of work in 2019 as part of our EIT Health Think Tank, which aims to offer analysis of the ‘innovation pathway’ – the pathway from idea to market. This project will bring together expertise from all stages of the pathway, across multiple European countries, to look at the challenges and opportunities for how the pathway could be improved to make it easier for innovators to bring their ideas to market, breaking down barriers where possible.

Technology has the potential to improve health exponentially – promoting healthy living, preventing and detecting diseases, optimising treatment, and managing chronic conditions. This has never been more important as we face substantial challenges such as an ageing population, a continuous rise in chronic disease and strained health systems. We have a responsibility to help promising innovation that arms us in the fight against such challenges to reach patients, citizens and healthcare providers.